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ETF Trading Report: Bond ETFs in Focus to End the Week - ETF News And Commentary

American stocks finished the week on a solid note although they
still were down for the week, as Bernanke helped to once again
reignite hopes for more stimulus. This came out in a letter to
Darrell Issa of California, the chairman of the House Oversight and
Government Reform Committee, in which
Chairman Bernanke wrote that
'There is scope for further action by the Federal Reserve to ease
financial conditions and strengthen the recovery'.

This was enough for many market participants to buy stocks, as
the Nasdaq added about half a percent, the S&P 500 rose by 0.7%
and the Dow gained just over 100 points, or 0.8%. Gains were pretty
widespread throughout the market, although there were some losers
in the electronic retailer, steel, and copper mining segments
during Friday trading (read
Three Defensive ETFs for A Bear Market
).

Instead, the markets were led higher by strength in the telecom,
biotech, and pharma spaces, while consumer goods, basic materials
and financials all trended higher as well. Some of the standouts in
these markets were Verizon with a 2.2% gain and Eli Lilly with a
3.4% jump in Friday trading.

This positive trading came despite a modest uptick in the value
of the dollar against global currencies, as the greenback
strengthened against most of the European currencies and was more
or less flat against the resource ones to close out the week. The
Treasury market was less interesting, as the U.S. benchmark rate
added just one basis point while European counterparts were pretty
much flat as well in Friday's session.

Commodity trading also ended the week on a sour note, as a
stronger dollar and weakness in the headline commodities helped to
send the sector into the red overall. All the energy products were
lower while similar moves were seen in the soft commodity market,
livestock, and base metals. Instead, soybeans, cocoa, and coffee
were among the few winners on the day, temporarily bucking the
trend in the space (see
Hard Times in Soft Commodity ETFs
).

In ETF trading, investors saw light volume in many of the equity
products, although it wasn't as bad as one might expect for a
Friday in August. Trading was instead focused in on the bond
market, while commodities and international ETFs also saw
respectable trading levels for Friday's session.

In particular, ETF investors saw an outsized trading day for the
iShares Barclays Short Treasury Bond Fund (
SHV
)
. The product never really moves very much in terms of performance,
but it did see an enormous volume increase as more than 3.2 million
shares moved hands, well above the 260,000 daily share average (see
Comprehensive Guide to Money Market ETFs
).

Certainly, some investors are seeking to park their cash in
these exchange-traded vehicles instead of putting their money in
money market funds, but other factors seem to be at work as well.
Other short-term bond ETFs didn't see the same level of interest,
so it appears as though SHV is just the preferred choice for
uncertain short-term investors to stash capital before they figure
out where to risk it next.

Another bond ETF which was a big mover in terms of volume today
was the
SPDR Nuveen Barclays Capital Muni Bond Fund (
TFI
)
. This product usually does about 200,000 shares in a normal
session but saw volume exceed the 1.29 million share mark today
(also read
Don't Forget About These Impressive Muni Bond
ETFs
).

Much like in the short-term bond space, ETF investors didn't see
a similar level of interest in other muni bond ETFs, suggesting
that short-term traders preferred to gain their exposure to the
segment via TFI instead of some of the other funds in the segment.
Furthermore, the product may be attracting some momentum-focused
investors, as TFI is within 1% of its 52 week high, although it did
trend a bit lower in today's session.

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